Exporters chairman warns growers beware

The New Zealand Wool
industry will be completely decimated if the Wool Industry
Network (WIN) has got it wrong in its mission to restructure
the industry and replace wool auctions.

A new wool
company set up by WIN recently bought the PGG Wrightson wool
business and has publicly stated they will restructure the
industry and do away with wool auctions.

“There
will be no going back or getting a second chance for growers
once the present wool industry infrastructure and selling
system is demolished,” the chairman of the Wool Exporters
Council Mr Henderson said.

“When it’s gone, it’s
gone and at present there are no hard facts out in the
public arena around the deal the Wool Industry Network
negotiated with PGG Wrightson or how growers’ wool will be
sold once the auction no longer exists.”

Mr
Henderson said the new wool company was attempting to garner
public support for an end to wool auctions without
publishing any financial facts and figures.

“It does
not take into account years of relationship building that
exporters have spent with end users and the investment of
millions of dollar working sometimes months ahead to
establish forward contracts.

“On the day, the auction
is a snapshot of prices that represents a lot of hard work
and financial commitment and risk taking. The WIN vision is
to assume all of this risk with a grower-owned entity that
will have to establish a price ‘on the day’ without the
auction, which is presently used as a price indicator for
all wool sales.

“The big difference will be a lack of
pricing transparency. Growers won’t be able to compare
their offerings and will be taking an enormous leap of faith
when it comes to committing their wool for sale.

“Auctions work well in property, artwork, antiques
or high value and sought after areas and it is a successful
way of buying or selling for tens of thousands of people on
TradeMe.

“Growers need to ask themselves ’does this
new company have a capable pair of hands?’ because there
is such a lack of hard facts and it is pure speculation that
this is going to work,” Mr Henderson
said.

“We’ve heard the newly
appointed chairman of The Wool Company Theresa Gattung
enthusiastically talking about a ’serendipitous’ time
for wool and ’hot to trot’ manufacturers.

“But
it wasn’t so long ago that Ms Gattung, as the former CEO
of Telecom, told analysts that she used confusion as a
marketing tool to maintain profit, Mr Henderson said.

Her exact quote in May 2006 was:

“Think about
pricing. What has every Telco in the world done in the past?
It’s used confusion as its chief marketing tool, and
that’s fine. You could argue that’s helped all of us
keep calling prices up and get those revenues, high margin
businesses, keeping going for a lot longer than what would
have been the case. But at some level, whether they are
conscious of it or not, customers know that that’s what
the game has been, they know we’re not being straight
up.”

Mr Henderson said the way Ms Gattung has started
her new career in the wool industry indicated wool growers
could expect more of the same.

“This is a classic
case of the growers being told ‘trust us we know what
we’re doing’, but already the Wool Industry Network had
missed critical deadlines it has published on its
website.”

Mr Henderson said the wool industry has
been waiting for WIN to publish its promised “robust
economic impact” assessment but nothing had yet
materialised.

“WIN claims to have a mandate for
committing growers to this massive restructuring. The WIN
website based their strategy on feedback from 45 growers,
never mind the opinions of the other 15,000 who grow and
sell wool and have had no say,” Mr Henderson said.

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